UK Law and Practice Contributed by: Ros Bever, Claire-Marie Cornford, Helen Clarke and Ashley Hill, Irwin Mitchell
between the parties; (d) gifts made as part of a regular pattern of ex - penditure out of surplus income; (e) gifts to UK charities and certain community amateur sports clubs; and (f) other gifts (PETs) that become exempt on the donor surviving them by seven years. • Subject to certain conditions, IHT reliefs include: (a) 100% business property relief (BPR) in respect of an interest in a business that is wholly or mainly trading (50% relief for personal assets used in the business); and (b) 100% agricultural property relief (APR) for land and associated buildings and farmhouses used for the purposes of agriculture by an owner occupier (50% relief if let out for agricultural purposes). See 1.5 Stability of Tax Laws regarding upcoming changes limiting APR and BPR. 1.3 Income Tax Planning Prior to 6 April 2025, the remittance basis allowed UK- resident individuals not domiciled or deemed domi - ciled in the UK to keep foreign income and gains out of the scope of UK tax if left offshore. On 6 April 2025, the remittance basis was replaced by a new residence-based “Foreign Income and Gains regime” (“FIG regime”) allowing certain foreign income and gains to be exempted from UK tax during the first four years of UK residence. Transitional provisions apply, including: • a Temporary Repatriation Facility (TRF) to encour - age former remittance base users to remit pre-6 April 2025 foreign income and gains, to which a significantly reduced rate of UK tax will apply; and • for remittance base users, rebasing on certain dis - posals of foreign assets (subject to certain condi - tions). Where relevant, double tax treaties can provide oppor - tunities for income tax mitigation, with careful forward planning.
Various investment strategies and structures are avail - able in the UK to optimise income tax efficiency – for example, as follows. • Tax relief on private pension contributions, includ - ing certain types of overseas pension schemes. • ISAs (Individual Savings Accounts) offer tax-free growth and income. • Onshore and offshore investment bonds structured around life insurance contracts allow for growth to roll up within the investment wrapper, and for bond segments to be gifted prior to encashment. This is a popular form of investment within UK trusts, particularly where intended beneficiaries are likely to be lower-rate or non-taxpayers at the time of distribution and encashment. • Certain schemes offering tax relief to encourage investment in unquoted companies and social enterprises (such as the Enterprise Investment Scheme and Venture Capital Trusts). • Tax relief for donations to charity (for those philan - thropically minded). • Family investment companies (FICs) where growth is rolled up. 1.4 Taxation of Real Estate Owned by Non- Residents Non-UK residents pay a stamp duty land tax sur - charge on buying residential property in England and Northern Ireland. The highest rate applied (to value in excess of GBP1.5 million) is 19% where the purchase is of a property to let out or a second home (taking into account a further surcharge of 5%, which applies in that case). Different rules apply in Scotland and Wales under their respective land transaction tax regimes. Non-UK residents are liable for CGT on UK property sales subject to principal private residence relief, and IHT applies to UK land and buildings regardless of the owner’s long-term residence status. Rebasing is available on disposal of UK residential property held by non-UK residents on 5 April 2015 to the value at that date. Under the Non-Resident Landlord Scheme (NRLS), any letting agent, or otherwise the tenant, must deduct
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